Hungary’s government

Viktor and Victor

Lessons from Budapest to Bucharest

VICTOR PONTA, the Romanian prime minister driving a tank through the constitution (see previous article), could learn from Viktor Orban, his Hungarian counterpart and near namesake. Rather than wreck Hungary’s constitution, Mr Orban replaced it. Hungary’s slide towards autocracy has been solidly buttressed by a two-thirds parliamentary majority for Fidesz, the right-wing ruling party. The prime minister and his acolytes say this gives them a mandate for radical change.

That, critics say, extends to putting party allies in charge of the main institutions, including the presidency, the state prosecutor’s office, the state audit office, the judicial authority and the media council—some with mandates for nine years. A new class of oligarchs, several with close ties to Fidesz, is building up business empires, fuelled by generous government contracts. The state has been captured by private interests, warns Transparency International, an independent watchdog.

The government rejects such criticisms. All officials exercise their mandates independently, it insists. Janos Ader, the new president, certainly has a mind of his own. Unlike his predecessor, Pal Schmitt, Mr Ader has returned several laws to parliament. But the media council’s slow suffocation of Klubradio, Budapest’s left-leaning independent radio station, continues.

Mr Orban arouses passions across the political spectrum. His ruthless, winner-takes-all approach has further polarised an already divided society. He has played a masterful game, rousing the patriotic masses on national holidays against Hungary’s new overlords in Brussels but simultaneously making conciliatory noises when needed.

The prime minister soon realised that there is little the European Union can do to bring Hungary to heel apart from using chapter seven of the EU treaty to suspend Hungary’s voting rights. There is little appetite for this, especially during the euro crisis. A threat to suspend €495m ($610m) of development funds when Hungary was in breach of its budget-deficit target ended in compromise. A dispute over the central bank has been settled. Concessions were made over the judiciary after a critical report from the Council of Europe’s Venice Commission. Mr Orban gives enough to take the pressure off, but he carefully guards his domestic base, especially on the right flank, as the far-right Jobbik party remains a threat.

Romania’s Mr Ponta has one advantage over Mr Orban: an IMF deal. Last month the Fund agreed to make a further €2.7 billion available to Bucharest. Hungary is still seeking a stand-by arrangement of €15 billion. The forint remains volatile. Talks are due to start next week with the IMF and the EU. Parliament has just passed a law levying a financial-transactions tax to pay for $1.27 billion worth of cuts in employers’ social-security contributions. An innovative idea, except that it has been applied to the dealings of the central bank.

Andras Simor, the bank’s governor, described the tax on the central bank as “nonsensical and illegal”. The EU, the European Central Bank and the IMF may agree. Mr Orban’s control is assured for now. But it will be a bumpy road to an IMF deal.